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US, Panama sign free trade pact just in time

28 June 2007

U.S., Panama sign free trade pact just in time



The United States and Panama signed a free trade agreement on Thursday with only a few days to spare before key U.S. legislation expires.

Like trade deals struck with Colombia and Peru, the Panama pact requires congressional approval. It is considered relatively noncontroversial, but it is unclear how soon Congress will take action.

The Panama pact tears down tariffs and other trade barriers between the two countries in manufacturing, services and other sectors. Over 88 percent of U.S. exports of consumer and industrial goods to Panama will become duty-free immediately, with remaining tariffs to be phased out over 10 years.

The Panama agreement and another pact with South Korea that will be signed on Saturday are likely the last trade deals the Bush administration will submit to Congress.

That’s because the White House’s "fast track" trade promotion authority expires at midnight on Saturday (0400 GMT on Sunday).

That legislation allows the White House to negotiate trade deals that Congress must approve or reject within a specified period of time without making changes.

Any trade agreement signed after Saturday would not have that protection, making it much harder for U.S. trade officials to negotiate a deal and get it through Congress in one piece.

The deal includes provisions that require the United States and Panama to abide by core international labor standards and certain international environmental agreements. Democrats, who won control of Congress last year, demanded the language be inserted into trade pacts.

The United States and Panama began talks on the pact in April 2004 and finished in December after stopping and starting several times.

Panamanian negotiators were concerned that the agreement not be seen by their countrymen as returning control of the Panama Canal to the United States just as the country was embarking on a project to expand the waterway.

The pact guarantees Panama’s construction firms at least 10 percent of the contracts in the $5.25 billion canal expansion, while providing U.S. companies preferred access to one of the largest building projects in the world.

It also gives Panama’s farmers more access to the U.S. sugar market, a sensitive sector for the United States.

Panama’s agriculture minister resigned last year in protest of the market-opening agricultural concessions Panama would have to make in the deal.

More than half of current U.S. farm exports to Panama, including high-quality beef and other meat and poultry products, will become duty-free immediately, with most other farm tariffs phased out over 15 years.

 source: ABC News